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TMI Blog2023 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... gitimacy of the expenses incurred by the assessee and the benefits derived by it from the same. Payment made to directors is not bogus for which nothing has been brought on record by the Ld. AO. Thus, we are in agreement with the submission of that once it is established that remuneration has been paid to directors then Revenue cannot put itself in the arm chair of a businessman to assume the role of ascertainment, how it is a reasonable remuneration having regard to the facts and circumstances of the case. Matter of commercial expediency should be left to the businessman concern or the board of directors - We direct to delete the disallowance made - Accordingly, ground no. 2 is allowed. Addition u/s 40A(3) - as submitted that assessee made reimbursement of expenses incurred by the two advocates on behalf of the assessee - HELD THAT:- As from the perusal of the order of Ld. CIT(A), we take note of the facts which have been tabulated, giving all the explanations and details for the payment made to the two advocate professionals towards reimbursement of expenses incurred by them on behalf of the assessee. We do find force in the submission made by the Ld. Counsel explaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri Shubham Rastogi, CA For the Respondent : Smt. Alka Singh, DR ORDER PER BENCH : This appeal by the assessee is against the order by Ld. CIT(A)-4, Kanpur in Appe al No. CIT(A)-IV/26/DCIT-CCII/ KNP/2015-16/13 dated 06.06.2016 against assessment order by DCIT, Central Circle-2, Kanpur u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 30.03.2015. 2. Assessee has raised six ground of appeal in respect of various addition and disallowance made by the Ld. AO and sustained by the Ld. CIT(A) which are dealt in seriatim. These will be elaborated while adjudication and are, therefore, not reproduce hereunder for the sake of brevity. 3. Brief facts of the case are that assessee is engaged in the business as a builder and coloniser. It owns petrol pump in the name and style of M/s. Leaf Filling Station and dealing in petrol products situated at Bareili. Assessee filed its return of income on 30.09.2012, reporting total income of Rs.1,02,45,450/-. Case of the assessee was selected for scrutiny. Statutory notices were issued and served on the assessee for which part compliance was made, as noted by the Ld. AO. In the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) PAN and address of the share subscriber; (b) Confirmation of the share subscriber; (c) Form No. 2 filed with ROC which was duly verified by its special auditor appointed u/s. 142A of the Act; (d) Copy of audited Balance Sheet, P L Account of the share subscriber for the year ending 31.03.2012. 5.2. Ld. Counsel further submitted that due to disputes amongst the directors of the share subscribing company and that of the assessee, copy of bank statement could not be procured from the share subscriber company. In view of the dispute, a request was made to the Ld. AO in the course of assessment proceeding, to exercise the powers vested in him u/s. 131 of the Act for issuing summons on the share subscriber for verifying this impugned transaction which the Ld. AO did not choose to do so. It was also submitted that in the course of assessment proceeding, complete books of account and other relevant documents including cash book, bank statements of the assessee were produced and were examined by the Ld. AO. It was also submitted that the share application money was received in cash and, therefore, there is no entry which can be traced in the bank statement of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer to make proper investigation and reach the shareholders. The assessing officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. In our considered view, the assessing officer ought to have found out their details through PAN cards, Bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the assessing officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in limini with no order as to costs. 5.3.3. Hon'ble Bombay High Court in the case of CIT vs. Creative World Telefilms Ltd. (supra) wherein it was held as follows: Wherein the matter concerns money receipts by way of share application from investors through banking channel, the assessee has to prove the existence of the person in whose name the share application is received. Once the existence of the investor is proved, it is not further the burden of the assessee to prove whether that person itself has invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect, reliance is placed on the decision of Hon ble High Court of Bombay in the case of CIT Vs. Indo-Saudi Services Travel Pvt. Ltd. 219 CTR 562. Ld. Counsel also submitted that in the similar set of facts and circumstances in the assessee s own case for AY 2013-14, Ld. CIT(A)-1, Kanpur has deleted the addition made by Ld. AO u/s. 40A(2) of the Act. 6.3. Considering the factual matrix in the present case, we note that directors remuneration paid by the assessee against the turnover and net profit of the assessee in past five years demonstrate the legitimacy of the expenses incurred by the assessee and the benefits derived by it from the same. We also note that the payment made to directors is not bogus for which nothing has been brought on record by the Ld. AO. Thus, we are in agreement with the submission of the Ld. Counsel that once it is established that remuneration has been paid to directors then Revenue cannot put itself in the arm chair of a businessman to assume the role of ascertainment, how it is a reasonable remuneration having regard to the facts and circumstances of the case. In such a case, matter of commercial expediency should be left to the businessman concern o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were received by the assessee in the year under consideration though they relate to the preceding year. It was also contended that there is no loss to the revenue, since by not claiming these expense in the preceding year, the income for that year has been reported at a higher amount and that both the current year and the preceding year are subject to the same rate of taxes. 8.1. From the perusal of the order of Ld. CIT(A), we note that details of these expenditure are tabulated which relate to service charges, site maintenance, construction expenses and generator running and maintenance expenses for which claim of these expenses were submitted before the assessee by respective service providers after the close of accounting year and, therefore, the assessee claimed the expenses in the year under consideration. Genuineness of these expenses is not doubted by the Ld. AO. What is in dispute is only the year of claim for these expenses. All these expenses are legitimate business expenses allowable u/s. 37(1) of the Act. Ld. Counsel also placed reliance on the decision of coordinate bench of ITAT, Mumbai in the case of Kellogs (India) Pvt. Ltd. vs. ACIT (2012) (12) TMI 664 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, ground no. 5 is allowed. 10. Ground no. 6 is in respect of addition of Rs.1,36,000/- on account of sponsorship expenses by treating the same as donation. Ld. Counsel submitted that assessee has claimed business promotion expenses which have been incurred by the assessee by way of contribution to various association and bodies and temples for festive occasions, details of which are tabulated below: i) 27.08.2011 Donation to District Badminton Association, Bly Rs. 25,000/- ii) 27.09.2011 Donation to Shri Shirdi Sai Raaksha Dham Rs. 5,000/- iii) 04.10.2011 Cash paid to Bareilly Dasahra Ram Lila Samiti Rs. 15,000/- iv) 04.10.2011 Cash paid to Shri Hari Mandir Rs. 15,000/- v) 04.10.2011 Cash paid to Shri Hari Mandir Rs. 10,000/- vi) 24.12.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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